Buying a Car Without Driving Yourself Crazy

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WHAT TEACHERS ARE BUYING --
AND WAYS TO PAY

Just as important as researching which car to buy is researching the financing, rather than leaving it to chance once you get to the dealer. "If you get a good deal, and it's poorly financed, you've lost all your gains," noted Philip Reed of Edmunds.com.

Check with local lenders and online to see what interest rate you qualify for before you go to the dealer, he advised. Some lenders will issue a blank check with a blocked-in interest rate so you can go to the dealer as a cash customer.

"A dealer may offer a better interest rate, but you know what you deserve," Reed said.

Many teachers also turn to their credit unions for assistance and financing. "Credit unions typically offer far better financing options than banks or dealerships," said Thomas Rifkin of Minnesota's Teacher Federal Credit Union.

The two credit unions with which Education World spoke said that while teachers often buy late-model used cars, more are buying new cars and finding they need more financing than in the past.

"Teachers used to look a lot at used vehicles, pay them off early, and put a lot down," said Stacy Benoit of Members Advantage Credit Union, which has about 7,500 members from four rural Vermont counties. "We see that changing. Teachers who haven't bought a car in several years ask for rates for three- or four-year loans and just about die when they hear the monthly payments on those loans. They just don't realize how much vehicles cost now."

Auto loans represent the largest percentage of the credit union's business -- about 50 percent -- and more people are using their loans for new cars, she said.

"Teachers are finding they don't have as much money to put down and they need longer terms for lower payments," Benoit added.

"If you get a good deal, and it's poorly financed, you've lost all your gains."

Some teachers, like the general population, she noted, probably have more unspecified debt -- such as credit card balances -- while younger teachers are struggling to pay off student loans.

Cars with all-wheel-drive are popular among the members of because of the snowy winters, said Benoit.

Rifkin, whose credit union's membership includes about 54,000 teachers, retired teachers, and their family members from all over Minnesota, said that car loans also represent the bulk of its business -- between 60 and 70 percent. A typical car loan is about $15,000, he said. "Teachers are no different from the public in general -- they need financing."

Most teachers applying for loans are buying late-model used cars. But they can be influenced by other factors, such as dealer incentives like 0 percent financing on new-car purchases, Rifkin said. Pick-up trucks are particularly popular with their membership, he said.

"Teachers who haven't bought a car in several years ask for rates for three-or four-year loans and just about die when they hear the monthly payments on three- to-four year loans. They just don't realize how much vehicles cost now."

Some automakers have reached out to the educator market. Saturn began actively marketing its cars to teachers about ten years ago. The company's lower prices and no-haggle purchasing policies meshed well with the educator profile, said Tony Parrottino, promotions manager for Saturn. "It's a great demographic," Parrottino told Education World. "It [the teaching profession] is female-oriented, educated, and value-conscious. Saturn is very popular with women because of the no-hassle, no-haggling policies. Where it sat in the market in terms of cost appeals to younger teachers."

The company is continuing to reach out to teachers, but Parrottino noted that when Saturn started producing more high-end cars, it lost some segments of its customer base.

MORE ABOUT CAR-BUYING

Click the links below to read more on this topic.

Start With Homework
Decide what you need, and then start researching cars that fit your needs and budget.

What's Hot?
Smaller, more environmentally-friendly cars are increasingly popular. Certified pre-owned cars also are drawing more buyers.

Gender Gaps
Men and women have different priorities for cars -- go figure -- and women now buy the majority of new cars in the U.S.

More Car-Buying Resources
Here's some information to help in buying and financing a car.

Article by Ellen R. Delisio
Education World®
Copyright © 2007 Education World

10/25/2007